Manhattan office vacancy falls to lowest level since 2021 as leasing momentum continues

Manhattan, NY The local office market continued to strengthen during the second quarter of 2026 as vacancy declined to its lowest level in nearly four years, supported by healthy leasing activity and continued reductions in available space, according to Cushman & Wakefield’s latest Manhattan Office Market Report.

Manhattan’s overall vacancy rate fell 60 basis points during the quarter to 19.3%, the lowest level since the third quarter of 2021. Midtown vacancy declined to 17.7%, its lowest level in more than five years, while Midtown South vacancy fell for the seventh consecutive quarter. At the same time, sublease availability dropped to 12.1 million s/f (m s/f), the lowest level since Q2 2020, and direct vacant space declined to a 16-quarter low.

Although quarterly leasing moderated from an exceptionally strong first quarter, overall demand remained healthy. Manhattan recorded 8.2 m s/f of new leasing during the second quarter, bringing year-to-date leasing activity to 17.7 m s/f, a 12.6% increase from the first half of 2025. Lease renewals totaled 5.8 m s/f through June, up 22.9% year over year, while combined new and renewal leasing increased nearly 15% over the same period to 23.5 m s/f .

“The Manhattan office market continues to move in the right direction as occupiers make longer-term commitments and high-quality space becomes increasingly constrained,” said Lori Albert, director of tri-state research at Cushman & Wakefield. “The combination of declining vacancy, lower sublease inventory and stronger renewal activity reflects growing confidence among tenants and reinforces that the market is steadily tightening, particularly across the highest-quality buildings.”

Demand remained concentrated in the core business districts. Midtown generated 5 msf of new leasing during the quarter, while Midtown South leasing continued to outperform its recent historical average. Downtown also posted strong momentum, with year-to-date leasing reaching 4 msf, an increase of nearly 138% from the same period last year.

As availability continued to tighten, pricing for premier space remained resilient. Manhattan Class A asking rents increased to $84.79 per s/f during the quarter, while Midtown Class A rents climbed to $88.50 per s/f. Overall asking rents across Manhattan remained largely stable.

“The market remains highly selective, with tenants continuing to prioritize quality, location and workplace experience,” Albert added. “That dynamic is supporting performance in the strongest assets while gradually reducing excess availability across Manhattan.”